Preparing for AIFMD 2.0 and the Impact on Annex IV Reporting

The Alternative Investment Fund Managers Directive (AIFMD) is undergoing a significant update. Published in the official EUR-Lex journal in March 2024 and entering into force the following month, AIFMD 2.0 introduces substantial changes that will affect alternative investment fund managers (AIFMs). With member states required to apply these new rules by April 16, 2026, fund managers must begin preparing for the operational and reporting shifts ahead.

A key area of focus is the evolution of Annex IV reporting obligations under Article 24. While the final technical standards from the European Securities and Markets Authority (ESMA) are not expected until April 2027, the directive itself provides a clear framework for what lies ahead. Proactive preparation is crucial for a smooth transition. This analysis examines the primary changes to Annex IV reporting and outlines the practical steps fund managers can take to ensure compliance.

As preparations for AIFMD 2.0 progress, SS&C is evaluating the evolving regulatory requirements to anticipate how they will impact Annex IV reporting. Drawing on our longstanding experience with AIFMD Annex IV, we are reviewing the directive and forthcoming technical standards to identify the operational adjustments that may be required. This approach allows us to keep clients informed of relevant developments, facilitate their planning processes and support their ongoing compliance efforts as new obligations emerge.

Key Changes at a Glance

To provide a clear overview, the following table summarizes the principal changes introduced under AIFMD 2.0 and their immediate implications for Annex IV reporting:

Each of these areas is explained in more detail in the sections that follow.

Expanded Scope of Reporting

Under AIFMD I, reporting was limited to the principal markets, instruments and assets of the alternative investment funds (AIFs) under management. This allowed for a degree of discretion in what was disclosed.

AIFMD 2.0 removes this ambiguity by mandating that AIFMs must report on all markets, instruments, exposures and assets. This shift toward comprehensive disclosure necessitates a more granular approach to data collection and management.

To meet these expanded requirements, fund managers must focus on several key areas:

• Data Granularity: The directive will require a significantly greater volume of detailed data. Systems and processes must be capable of capturing and processing this information accurately.
• Asset Classification: Accurate tagging of asset types is essential. This may involve re-evaluating existing classification systems to accommodate a broader range of classes and ensure full instrument names, ISINs and aII details are correctly reported.
• Market Identification: Proper identification using Market Identifier Codes (MICs) and correct legal names for each market will be mandatory.

Revised Leverage Reporting

The initial AIFMD framework required only limited detail on leverage as part of general risk information. AIFMD 2.0 introduces more stringent requirements, compelling AIFMs to report the total amount of leverage employed by each AIF they manage.

This change aligns with a new, standardized definition of a “leveraged AIF.” Member states will now require each authorized AIFM to establish and adhere to specific leverage limits for every AIF under its management.

The expanded scope for leverage calculation will require access to more comprehensive underlying data. AIFMs will need to source all relevant market exposure values to perform these calculations accurately. This change aims to provide regulators with a clearer and more consistent view of systemic risk across the industry.

Enhanced Marketing and Delegation Disclosures

Transparency is a central theme of AIFMD 2.0, extending to how and where funds are marketed, as well as to delegation arrangements.

Marketing Information

Previously, there was no formal obligation to identify the specific jurisdictions where an AIF was being marketed. AIFMD 2.0 requires AIFMs to report the Member States in which an AIF’s units or shares are distributed.

This requirement enhances the visibility of cross-border distribution activities for both ESMA and national competent authorities (NCAs). It will have a notable impact on non-EU AIFMs marketing within the EEA, as they, or their host AIFMs, will be subject to these obligations. Managers may also need to implement look-through provisions to determine total geographical exposure accurately.

Delegation and Sub-Delegation

Delegation reporting under AIFMD I was minimal and unstructured. The new directive mandates detailed disclosures to address concerns about delegation risk and the potential for "letterbox" entities.

AIFMs must now provide specific information about their delegation arrangements, including:

• • The delegate’s name and domicile
  • The delegate's regulatory status
  • The percentage of assets under delegation
  • The number of staff overseeing the delegation
  • Dates of due diligence reviews

These new requirements will necessitate changes to the reporting template and XML schema to accommodate a dedicated section for delegation information.

Standardization of Reporting Format and Transmission

A significant operational change under AIFMD 2.0 is the move toward harmonization in reporting formats and data transmission.

Frequency and Format

Under the current regime, national regulators determine the format and frequency of submissions, leading to inconsistencies across the EU. AIFMD 2.0 directs ESMA to develop standardized templates and reporting instructions through implementing technical standards, expected by April 2027.

This will lead to updated XML schemas and validation rules, creating a more uniform reporting landscape across the European Union.

Transmission to ESMA

Currently, information is submitted only to the respective NCAs. The new framework mandates that NCAs will transmit all reported data to ESMA, which will establish a central EU database.

This move towards a single submission platform may impact existing workflows, including login and signatory access, as well as the technical connectivity to reporting platforms.

New Rules for Loan-Originating AIFs

AIFMD 2.0 introduces a specific reporting category for loan-originating AIFs, which were not clearly addressed in the original directive. AIFMs managing funds engaged in direct lending must now include detailed loan portfolio information as part of their Article 24 reporting. This supports the new, specific rules governing these types of funds and will require adding new sections to the reporting template and XML file.

Navigating the Transition

The timeline for these changes is clearly defined. Member states are required to transpose the directive into national law by April 16, 2026, with the new reporting measures becoming effective one year later on April 16, 2027. This provides a crucial transition period for firms to adapt their systems, processes and data management frameworks.

As an experienced provider of serviced software solutions for AIFMD Annex IV since its inception, SS&C is actively preparing for this next phase of regulatory reporting. By analyzing the directive and anticipating the technical standards, we are developing solutions to help our clients navigate these changes seamlessly. If you have questions about preparing your firm for AIFMD 2.0, please contact us to get in touch with our experts.